DTN Oil Update
Brent Races to $115 as Drones Hit UAE Energy Hub, Hormuz
SECAUCUS, NJ (DTN) -- Energy markets rallied anew Monday, driving crude futures up 6%, after an Iranian drone attack on a petroleum complex in the United Arab Emirates stoked new fires in the Middle East conflict.
The strike on the VTTI Fujairah Terminals in UAE's eastern port city of Fujairah marked the first major escalation in almost a month in the conflict, after an April 8 ceasefire that halted U.S.-Israel bombing of Iran and Tehran's reciprocal strikes on its neighbors' oil facilities.
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Media images showed thick smoke billowing from the Fujairah plant, part of the global VTTI network owned by Dutch energy trader Vitol and Australia's IFM Investors.
Media reports said a UAE oil tanker was also targeted by two drones while passing through the Strait of Hormuz, the waterway Iran has pledged to control in its bid to collect reparations for the war from vessels that, prior to the war, delivered a fifth of the world's energy needs.
Separately, the U.S. Navy exchanged fire with Iranian gunboats after U.S. President Donald Trump announced the U.S. would be creating a path for some 2,000 ships reportedly waiting to pass the Hormuz. In normal times, the waterway provides passage to 140 ships per day, carrying around 20 million bpd of petroleum liquids. Aside from Tehran's policing of the strait, the U.S. Navy is blocking any ship from entering or leaving Iran's ports.
The renewed U.S.-Iran escalation and tensions around the Hormuz drove NYMEX WTI crude for June delivery up $4.48, or 4%, to $106.42 bbl at the close.
By 2:30 p.m. EDT, global crude benchmark Brent was up $6.26, or 6%, to $114.43 barrel for the July contract on ICE Brent, reflecting the greater impact on oil supply outside of the U.S. Brent's session high was $115.30.
Downstream, NYMEX ULSD futures for June delivery edged up by $0.1236 to $4.0700 gallon. NYMEX RBOB futures for June climbed $0.1436 to $3.7388 gallon.
The U.S. Dollar Index advanced by 0.335 points to 98.4 against a basket of foreign currencies.